The EML Payments Ltd (ASX: EML) share price won’t be going anywhere on Monday.
Prior to the market open this morning, the payments company requested a trading halt.
Why is the EML Payments share price in a trading halt?
This morning EML Payments requested a trading halt to facilitate an orderly market in its securities pending an announcement in relation to significant regulatory concerns notified by the Central Bank of Ireland.
According to the release, the company received notification of these concerns on Friday 14 May 2021. They relate to the Prepaid Financial Services business that EML acquired on 31 March 2020.
What is the Prepaid Financial Services business?
Prepaid Financial Services was founded in 2008 as a reseller of pre-paid cards. Since then it has evolved into a leading provider of white label payments and banking-as-a-service technology with a pan-European footprint.
The company notes that it provides payments and digital banking capabilities, e-wallets and payout/distribution programs, regulatory Electronic Money Institution status and flexible software to enable financial institutions and non-financial institutions to deliver feature-rich transactional banking and other payment services to their end-user base without becoming a regulated entity.
What are the concerns?
As things stand, neither EML Payments nor the Central Bank of Ireland have revealed the latter’s concerns publicly.
However, this isn’t the first time the Prepaid Financial Services business has faced regulatory scrutiny.
At the end of March, EML announced the resolution of regulatory action by the Payment Systems Regulator (PSR) in the United Kingdom against Prepaid Financial Services. This related to an investigation under the Competition Act 1998 into anti-competitive conduct. The two parties ultimately settled the matter with a maximum penalty of 0.92 million pounds.
It is unclear if the Central Bank of Ireland’s concerns are similar and what the potential penalties or impacts could be. The term “significant regulatory concerns” is somewhat ominous.
The EML Payments share price is expected to return to trade by Wednesday at the latest, when all will be revealed.